## Facts

- Fairchild sold its aerospace fastener business to Alcoa in 2002 for about $657 million under an acquisition agreement containing an FAA-governed arbitration clause.
- The agreement required Fairchild to indemnify Alcoa for certain environmental remediation liabilities exceeding a defined reserve threshold, funded in part by a $25 million escrow.
- From 2002 to 2006, Alcoa submitted over 200 indemnification claims totaling about $16.39 million for environmental remediation costs; Fairchild disputed coverage and documentation.
- The parties arbitrated the dispute after extensive discovery (including large document productions and multiple international depositions) and a nearly two-week evidentiary hearing before a former judge.
- Alcoa presented testimony explaining summary cost materials derived from documents produced in discovery; Fairchild cross-examined the witness.
- After the hearing, Alcoa offered additional voluminous supporting documentation; Fairchild objected as untimely, and the arbitrator declined to accept the post-hearing submissions.
- The arbitrator awarded Alcoa $12,455,585.88, implicitly rejecting certain claimed costs as unnecessary, commercially unreasonable, or unreasonably priced.
- Fairchild petitioned in federal court to vacate or modify (or reduce) the award, including based on asserted tax offsets; Alcoa cross-moved to confirm.

## Issues

1. Whether the arbitrator’s refusal to accept Alcoa’s post-hearing evidentiary submissions constituted misconduct under 9 U.S.C. § 10(a)(3) by refusing to hear evidence pertinent and material to the controversy, warranting vacatur.
2. Whether the award could be modified or reduced (including for alleged tax offsets) under the limited statutory grounds for modification of arbitration awards.

## Decision

- The court denied Fairchild’s petition to vacate or modify the award.
- The court granted Alcoa’s cross-motion to confirm the award in full.
- The court held that the arbitrator’s exclusion of late post-hearing materials did not amount to § 10(a)(3) misconduct and did not deprive Fairchild of a fundamentally fair hearing.
- The court rejected Fairchild’s requested reductions because they lacked a statutory basis and effectively sought merits review barred by the FAA’s limited judicial role.

## Legal Principles

- Judicial review of arbitration awards under the FAA is severely limited; vacatur is permitted only on narrow statutory grounds.
- Under 9 U.S.C. § 10(a)(3), vacatur for refusal to hear evidence requires a showing that the excluded evidence was pertinent and material and that exclusion prejudiced the challenger’s rights.
- Arbitrators have broad discretion over evidentiary and procedural rulings; an evidentiary limitation does not justify vacatur absent a denial of fundamental fairness.
- Courts will not modify or reduce an award absent a statutory basis; attempts to reargue the merits or recalibrate damages are generally impermissible.

## Conclusion

The court confirmed Alcoa’s arbitration award because Fairchild failed to show that the arbitrator’s refusal to accept Alcoa’s late post-hearing documentation was materially prejudicial or rendered the hearing fundamentally unfair, and Fairchild’s proposed offsets and reductions sought prohibited merits review rather than a statutorily authorized modification.


Fairchild Corp. v. Alcoa, Inc., 510 F. Supp. 2d 280 (S.D.N.Y. 2007)